Question

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $330,000 for November, $350,000 for December, and $340,000 for January. Collections are expected to be 80% in the month of sale and 20% in the month following the sale. The cost of goods sold is 70% of sales. The company desires an ending merchandise inventory equal to 70% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,300. Monthly depreciation is $21,100. Ignore taxes. Balance Sheet October 31 Assets Cash $ 22,100 Accounts receivable 83,100 Merchandise inventory 161,700 Property, plant and equipment (net of $595,000 accumulated depreciation) 1,005,000 Total assets $ 1,271,900 Liabilities and Stockholders' Equity Accounts payable $ 196,100 Common stock 630,000 Retained earnings 445,800 Total liabilities and stockholders' equity $ 1,271,900 Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. c. Prepare Cash Budgets for November and December. d. Prepare Budgeted Income Statements for November and December. e. Prepare a Budgeted Balance Sheet for the end of December.

Answer 1

Part A: The month of November are $322,000 and the month of December is $319,000.

Step-by-step explanation:

Deals done in November are expected to be paid for to the tune of 75% in November, followed by 20% in December, with 5% being uncollectible. Similar to how 20% of October's sales are collected throughout November.

Deals made in December must have 75% of the money collected in November. Additionally, 20% of November's sales are collected over the protracted month of December.